Korean Patent & Trademark Assignment: Contract, Registration, Tax

Assigning Korean patents or trademarks comes up in M&A, corporate splits, post-licensing cleanup, going-out-of-business sales, and individual-to-corporate transfers. Signing a contract is not enough on its own — Korean patent and trademark law makes transfer registration the effective requirement, so the right does not actually move to the assignee until the registry reflects it.

This guide steps through an assignment in practitioner order: contract checklist, transfer registration, when the right takes effect, tax treatment of consideration, and post-closing rights management. The trademark-specific 'one-year registration duty' and the 22% withholding on assignment proceeds (after a 60% deemed-expense deduction) are flagged separately because they are the recurring pain points.

Specific vs. General Succession — Two Different Tracks

Sort the type of succession before discussing registration. KIPO guidance distinguishes specific succession by intent (assignment, gift, bequest, pledge) from general succession by operation of law (inheritance, corporate merger or division). The two paths differ on when the right transfers and how registration is filed.

Contract Stage — Assignment Checklist

Standard sale-of-goods templates fall short for IP. The contract should reflect IP-specific specifics: scope, payment structure, representations, dispute handling, and post-closing cooperation. The clause that is easiest to miss but most damaging is the assignor's duty to cooperate through registration — without it, the assignor's silence after closing can stall the transfer.

• Identify the rights — registration number, application number, claim scope, designated goods, design serial
• Scope of transfer — full, partial (co-ownership share), use only, with or without licence assumption
• Consideration — lump sum, instalments, running royalty, currency and FX
• Representations and warranties — validity, no infringement claims, no liens or licences pending
• Cooperation through registration — assignor delivers seal certificate or signature confirmation, signs filings
• Disputes — Korean law, Seoul Central or Patent Court, settlement preference
• Post-closing — handling pending matters, knowledge transfer of files

Transfer Registration — When the Right Moves

For specific succession, file the transfer-registration application form 15 with the proof of cause (assignment certificate, sale contract) and the assignor's seal or signature confirmation per KIPO procedure. The right transfers as of the registration date, not the contract date, so all enforcement and licensing acts that depend on ownership must wait for the registry update.

Trademark-Specific Trap — One-Year Registration Duty

Trademark assignment carries an extra deadline that patents and designs do not. Korean precedent confirms that failing to register the transfer within one year of the assignment date can expose the registration to a cancellation trial. When the registry shows the assignor while the assignee actually uses the mark, the disconnect itself becomes a cancellation ground source.

Tax — Assignment Proceeds as 'Other Income'

Under NTS guidance, proceeds from assigning IP rights count as other income for individual income tax. The paying party withholds tax based on a deemed-expense deduction of 60%, applying a 22% rate (including local surtax) to the remaining 40% — a net withholding of about 8.8% of the gross consideration.

Co-Ownership, Licences, and Pledges

When the rights involve co-ownership shares, registered licences, or pledges, the assignment is more than a two-party deal. Run through the items below at the contract stage.

• Co-ownership — assignment requires consent from all co-owners (Patent Act art. 99 etc.)
• Exclusive / non-exclusive licences — registered licences pass to the assignee by default; confirm the post-assignment terms
• Pledges — decide whether to assume the pledge or release it before transfer
• Pending trials or litigation — file party-name change motions and align hearing dates
• Unregistered licences — limited effect against the assignee; resolve through a side-letter

Post-Closing Rights Management

The deal is not done at registration. The assignor must hand over pending matters, annuity schedules, renewal dates, and supporting files; the assignee must update registry contact details and bank routing. Sloppy handover frequently leads to lapsed annuities and lost rights — a high-cost outcome for what is administratively a small task.

Frequently Asked Questions

Q1. What if we keep the contract but skip the registration?

Specific-succession assignments take effect on registration, so until then the assignor remains the owner of record. Enforcement actions or licences from the assignee carry weakened legal effect, and trademark rights left unregistered for over a year can be hit with cancellation trials. Plan registration to coincide with closing.

Q2. The right transferred automatically through a corporate merger — do we still need to register?

Substantive transfer is automatic, but to dispose of the right (assign, licence, pledge) the registry must show the new owner. Standing in infringement suits also depends on registry accuracy, so the standard practice is to file a general-succession transfer registration shortly after the corporate event closes.

Q3. A founder is selling a personal patent to their own company — what should we watch?

It is a related-party deal, so pricing and procedure must withstand scrutiny. Use a licensed appraisal for fair market value, pay through normal corporate channels, and have the company withhold the 22% tax on the 40% base (≈ 8.8% of gross) at the time of payment. Skipping these steps invites constructive-related-party recharacterisation and back-tax assessments.

Q4. Do we need to notify licensees separately after the transfer?

Registered exclusive and non-exclusive licences pass to the assignee, but licensees who are not told of the change get confused about royalty routing and notices. Sending a 'change of owner' notice to each licensee right after registration — with new payment details and contact persons — is the standard friction-reducer. Unregistered licences should be cleaned up via separate side-letter at closing.